7 October 1988 Income Tax Severed Letter 5-6679 - []

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

XXXX R. Nanner (613)957-3494

October 7, 1988

Dear Sirs:

This is in response to your letter of September 28, 1988 requesting our position on benefits that are contingent on the existence of a registered retirement savings plan ("RRSP").

Since you have not asked us to comment on a particular type of benefit or advantage that is being offered as a part of an RRSP marketing plan, we offer you the following general comments.

Lotteries and contests that offer a prize which is deposited into the RRSP do not run afoul of paragraph 146(2)(c.4) of the Income Tax Act (the "Act"). On the other hand, prizes offered to the annuitant or to a party with whom the annuitant does not deal at arm's length (i.e. outside of the RRSP) would be considered benefits within the context of paragraph 146(2)(c.4) of the Act. Such a plan would cause deregistration of the RRSP.

With respect to the favourable rates of loans to acquire RRSPs, we are of the view that a rate of interest on loans for RRSP contributions that is more favourable than the rate of interest offered by the issuer on non-RRSP loans on similar terms and security is an advantage for the purposes of paragraph 146(2)(c.4). This is true even where the advantage of the low rate is offset by a low rate on the RRSP deposit. Hence, deregistration of the RRSP could ensue from making use of such loans to fund one's RRSP.

We hope these comments are of assistance to you.

Yours truly,

for Director Financial Industries Division Rulings Directorate